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Protecting against future financial challenges when dividing debt

On Behalf of | Jan 26, 2025 | Property Division |

The property division process during a divorce can be relatively complex. Couples who enjoy a higher standard of living often own a variety of different types of assets. They may also share numerous financial obligations with one another.

Credit cards and other revolving lines of credit help ensure that people have financial flexibility. They can pay off major purchases over many months and cover unexpected expenses that arise in between paychecks. Spouses who have balances due on their credit cards generally have to address those financial obligations along with their property as they prepare for an upcoming divorce.

Spouses need to carefully consider financial responsibility and their budgets when dividing debt during a divorce.

The challenges of dividing marital debt

There are several common challenges that people have to overcome when addressing marital debts in a divorce. The first is the need to determine which debts are marital and which ones are technically the separate responsibility of either spouse.

Debts that originated before the marriage are usually not part of the marital estate. Spouses can also sometimes challenge the inclusion of debts accrued maliciously or while conducting an extramarital affair.

After determining what debts are part of the marital estate, spouses have to consider what they can afford in the future. After all, the resources that previously covered the expenses for one shared residence must now pay for two sets of household bills. People have to carefully consider how much they can afford to allocate toward debts every month.

They also have to consider what might happen if their spouse falls behind on payments. A court order allocating debts to one spouse does not absolve the other spouse of their responsibility as a co-signer. If the spouse who assumes responsibility defaults by missing payments or files for personal bankruptcy, the other spouse might face litigation or aggressive collection efforts.

In some cases, the best possible arrangements involve using marital resources to pay off as much debt as possible so that spouses don’t have to worry about future defaults. They can both rebuild their lives without debts from the marriage affecting their budget.

Exploring solutions for debt can be as important as pushing for a fair allocation of marital property. Setting divorce goals based on long-term financial recovery and quality of living can make it easier for people to navigate complex property division matters during a divorce.

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